Sulphur Springs City Council are scheduled to consider taking action regarding an existing tax abatement granted to Ocean Spray Cranberries.
City Manager Marc Maxwell said city staff are expected to recommend to the council that the abatement be revoked because the terms of the abatement have not been fulfilled.
The council was asked to discuss and consider taking action on the matter at their regular May meeting. After discussion, City Attorney Jim McLeroy suggested the city council table the matter until Economic Development Corporation staff, who work directly with industries, could be consulted for a recommendation regarding the abatement. The council voted to table it until an EDC recommendation could be sought.
The issue of the tax abatement was raised after the Economic Development Corporation notified the city by letter that, during a review of tax abatement certifications, Ocean Spray was found to not be in compliance with the terms of the agreement, with fewer than the required jobs on the payroll for 2018,
Basically, Ocean Spray was granted two tax abatements, including one for 2018-2022 for equipment that was installed. In exchange for the abatement, the company is required maintain a certain number of employees, Maxwell explained.
“As it turns out, that’s not happening. Whether by layoff or attrition, they’ve lost some positions and don’t intend to replace them,” Maxwell said.
The company, per the terms of the abatement, is required to maintain 143 employees, but according tot he information the city received, had a reduction of 13 employees, the city manager told council members at the regular April meeting.
Councilwoman Erica Armstrong pointed out that Ocean Spray Cranberries representatives, in a response letter to the EDC regarding the matter, indicated they are trying to find a place for the employees whose jobs were lost.
“In their request, they did ask us to consider reducing the percent of the abatement. I think that would be a fair option in that they are trying to fulfill,” Armstrong said during the May 7 discussions.
Councilman Doug Moore at the May 7 meeting said based on the amount the city would receive if a pro rata option were granted, “I’m not sure that’s the way to go.” He asked if the abatement could be suspended for a year, to be evaluated at the end of the year, with the abatement granted then only if all the terms were met.
“We are bringing it back to them this time, and we are bringing it back with some numbers,” Maxwell said of the June 4 agenda item.
That leaves the council to decide what if any action is to be taken regarding the abatement: let the company continue with no changes in the abatement, revoke the abatement, revoke a percentage of the abatement, or other action.
“It’s going to be staff’s recommendation to revoke the abatement entirely,” Maxwell said this week.